Asensio & Co. Announces Investment Opinion: End of Polymedica's Medicare `Bonanza' Draws Closer.Business Editors NOTE TO EDITORS: The following is an investment opinion issued by Asensio & Company NEW YORK--(BUSINESS WIRE)--Oct. 31, 2002 A new regulation that outlines revised procedures for reducing excessive Medicare reimbursements to suppliers of durable medical equipment Durable medical equipment is a term of art used to describe certain Medicare benefits, that is, whether Medicare may pay for the item. The item is defined by Title XVIII the Social Security Act: DME - Distributed Management Environment ") was scheduled to be released by October 21, 2002. However, on October 18th the U.S. Department of Health and Human Services Noun 1. Department of Health and Human Services - the United States federal department that administers all federal programs dealing with health and welfare; created in 1979 Health and Human Services, HHS ("HHS HHS Department of Health and Human Services. ") withdrew the regulation. On October 18th PolyMedica Corporation's (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : PLMD PLMD Periodic Limb Movement Disorder (sleep disorder) PLMD Physical Layer Medium Dependent (networking) PLMD Please Let Me Die , $28.50) stock traded as much as 10% higher than the prior day's close perhaps signaling that investors believe that any reimbursement reductions would be significantly delayed. On the contrary, we have found that the HHS expects the regulation to be published in the Federal Register by the end of November 2002. Asensio & Company, Inc. has issued a report explaining the most recent Medicare reimbursement policy developments in Washington, D.C. affecting PolyMedica. Asensio & Company, Inc.'s latest report titled "Rules effecting PolyMedica's pricing scheduled for November release" was made available today at www.asensio.com. This regulatory action is unrelated to PolyMedica's liabilities arising from the criminal investigation. In June 2000 the HHS Office of Inspector General Noun 1. Office of Inspector General - the investigative arm of the Federal Trade Commission OIG independent agency - an agency of the United States government that is created by an act of Congress and is independent of the executive departments ("OIG") published its report concerning fraudulent and abusive practices in the blood glucose test strip ("strip") market. The report questioned whether some of the products that Medicare had paid for were even delivered. A 2002 study conducted by the OIG shows that Medicare overpaid at least $244 million for strips. PolyMedica generated 72% of its total net revenues in fiscal 2002 on sales of strips and related products. CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. has the authority to decrease excessive reimbursements for DME by up to 15% per year. A 15% reimbursement reduction to PolyMedica could have resulted in a loss of approximately $30 million in revenues during fiscal 2002. PolyMedica made $36.7 million in pre-tax income in fiscal 2002, excluding $12.2 million of capitalized advertising expenses net of amortization. The Department of Justice is currently conducting a criminal investigation of PolyMedica's Medicare billings. The investigation commenced on or about June 24, 1999. On August 21 and 22, 2001, pursuant to a Federal court order, the FBI conducted a search of PolyMedica's facilities and the homes of two of its officers. The allegations against PolyMedica reported in its August 14, 2002 form 10-Q filing expanded to include obstruction of justice A criminal offense that involves interference, through words or actions, with the proper operations of a court or officers of the court. The integrity of the judicial system depends on the participants' acting honestly and without fear of reprisals. . Asensio & Company, Inc. believes PolyMedica's results are not sustainable and that its stock is grossly overvalued Overvalued A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a . Therefore, we have a short position in PolyMedica and have advised the sale of PolyMedica shares short. Our reports on PolyMedica are available at www.asensio.com. Asensio & Company, Inc. is actively engaged in short sell investments and publishes research on securities it believes are overvalued. A complete documented history of Asensio's published work with short-selling transactions, and the firm's definition of gross overvaluation o·ver·val·ue tr.v. o·ver·val·ued, o·ver·val·u·ing, o·ver·val·ues To assign too high a value to: overvalued the painting. , is available on the Internet at www.asensio.com. John Wiley & Sons, Inc. has published a book about Asensio & Company's short selling titled "Sold Short: Uncovering Deception in the Markets." The book can be ordered on the Internet at www.asensio.com. Asensio Brokerage Services, Inc. is a broker-dealer registered with the SEC and is a member of the NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). . The firm predominantly advises private institutional clients. Short selling involves a risk not associated with the purchase of stock including, but not only limited to, unlimited loss and stock borrowing risks. Additional information is available upon request. Copyright 2002 by Asensio & Company, Inc. All rights reserved. This report should not be construed as an offer to sell or solicitation of an offer to buy any securities. Opinions expressed are subject to change without notice. This report has been prepared from original sources and data which we believe to be reliable but accuracy is not guaranteed. This research report was prepared by Asensio & Company, Inc. whose stockholders, officers and employees may from time to time acquire, hold or sell a position in the securities mentioned herein. |
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